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Agilent Technologies Reports Fourth Quarter 2006 Results


SANTA CLARA, Calif., November 14, 2006, Agilent Technologies Inc. (NYSE: A) today reported orders from continuing operations of $1.40 billion for the fourth fiscal quarter ended Oct. 31, 2006, 7 percent above one year ago. Revenues during the quarter were $1.33 billion, 6 percent above last year. Fourth quarter GAAP income from continuing operations was $132 million, or $0.32 per diluted share, compared with a loss of $22 million, or $0.04 per share, in last year’s fourth quarter.

Included in GAAP income from continuing operations are $47 million of charges related principally to the spin-off of Verigy and the reduction of Agilent’s infrastructure costs, and $21 million of non-cash compensation charges. Excluding these items and $9 million of tax and other net gains, Agilent reported fourth quarter adjusted net income from continuing operations of $191 million, or $0.46 per share. On a comparable basis, the company earned $147 million, or $0.29 per share, one year ago. Including the results of Verigy, Agilent’s fourth quarter adjusted net income was $0.52 per share.(1)

“The distribution of Verigy shares to our owners completes a transformative year for Agilent,” said Bill Sullivan, Agilent president and chief executive officer. “As a pure-play measurement company, we finished fiscal 2006 with strong operating results and good momentum.” In Q4, orders were up 7 percent from one year ago, revenues were up 6 percent, and adjusted net income per share from continuing operations, at $0.46 per share, was 59 percent above last year’s results.

Sullivan noted that the company’s fourth quarter Return On Invested Capital(2), at 29 percent, reached a new high. Adjusted operating margins were strong, inventories were below 100 Days-on-Hand during the quarter, and total cash generated from continuing operating activities reached $300 million. After distribution of Verigy shares, the company ended the year with net cash of $2.3 billion.

During the quarter, the company announced a repurchase program of up to $2 billion of its common stock over the next two years.

Sullivan added, “While being mindful of economic uncertainties in the year ahead, Agilent’s focus is to leverage, through higher sustainable growth, the robust operating model we’ve built. We have the strongest backlog in a half-decade, and look forward to 2007.”

In the fiscal first quarter of 2007, Agilent expects revenues of $1.25 billion to $1.29 billion, up 7 percent to 10 percent from last year. Adjusted net income is expected to be in the range of $0.36 to $0.40 per share(3), 24 percent to 38 percent above last year’s comparable earnings.

Segment Results
Bio-Analytical Measurement(4)
($ millions except where noted) | Q4:F06 | Q4:F05 | Q3:F06
Orders | 462 | 402 | 387
Revenues | 418 | 382 | 391
Gross Margin, % | 55% | 52% | 54%
Income from Operations | 83 | 65 | 60
Segment Assets | 922 | 690 | 918
Return On Invested Capital(2), % | 35% | 37% | 26%

Bio-Analytical Measurement recorded double-digit orders growth again in the fourth quarter, with a 15 percent year-to-year increase following the third quarter’s 11 percent rise. Record revenues of $418 million were up 9 percent from last year, and the segment’s book-to-bill ratio reached 1.11 during the quarter. Life Sciences revenues of $182 million were up 12 percent, with particular strength in China and India, broad acceptance of the company’s 1200 Series Liquid Chromatographs, and some signs of a rebound in large pharmaceutical spending. Chemical Analysis revenues of $236 million were up 8 percent from last year, with sustained momentum in Eastern Europe and Asia in the categories of food safety and the environment.

Segment income from operations of $83 million was $18 million above last year on a $36 million increase in revenues. Gross margins improved by 3 points, while operating margins also increased 3 points to a record 20 percent. Segment Return On Invested Capital(2), at 35 percent, was about unchanged from last year due to the impact of acquisitions.

Electronic Measurement(4)
($ millions except where noted) | Q4:F06 | Q4:F05 | Q3:F06
Orders | 935 | 902 | 838
Revenues | 909 | 866 | 848
Gross Margin, % | 57% | 55% | 58%
Income from Operations | 143 | 131 | 125
Segment Assets | 2,156 | 2,009 | 2,176
Return On Invested Capital(2), % | 28% | 26% | 24%

Fourth quarter Electronic Measurement orders of $935 million were up 4 percent from last year, with solid demand in the Americas and Asia, while Europe was about flat with last year. Revenues of $909 million were up 5 percent, with strength in General Purpose Test, particularly for oscilloscopes and component test products, while aerospace & defense was relatively flat compared to last year. Communications test was also relatively flat, with strength in wireless R&D test offset by continued weakness in wireline test markets.

Fourth quarter income from operations of $143 million was up $12 million from last year’s very strong results on a $43 million increase in revenues. Gross margins improved 2 points while segment operating margins rose 1 point, to 16 percent. Segment ROIC(2) of 28 percent was 2 points better than last year based on sustained improvements in both margins and working capital management.

About Agilent Technologies

Agilent Technologies Inc. (NYSE: A) is the world’s premier measurement company and a technology leader in communications, electronics, life sciences and chemical analysis. The company’s 19,000 employees serve customers in more than 110 countries. Agilent had net revenue of $5.0 billion in fiscal 2006. Information about Agilent is available on the Web at

Agilent’s management will present more details on its fourth quarter FY2006 financial results on a conference call with investors beginning at 5 a.m. (Pacific). This event will be webcast live in listen-only mode. Listeners may log on at www.investor.agilent.comand select “Q4 2006 Agilent Technologies Inc. Earnings Conference Call” in the “News & Events -- Calendar of Events” section. The webcast will remain available on the company’s Web site for 90 days.

A telephone replay of the conference call will be available from 10 a.m. (Pacific) today through Nov. 21, 2006. The replay number is +1 888 286 8010, or international callers may dial +1 617 801 6888; enter pass code 60693962.

Forward-Looking Statements

This news release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements contained herein include, but are not limited to, information regarding Agilent’s future revenues, earnings and profitability; the pace of new product introductions and future demand for the Company’s products and services; and guidance for the first quarter of fiscal year 2007. These forward-looking statements involve risks and uncertainties that could cause Agilent’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, unforeseen changes in the strength of our customers’ businesses, and unforeseen changes in the demand for current and new products and technologies.

In addition, other risks that Agilent faces in running its operations include the ability to execute successfully through business cycles while it continues to implement cost reductions; the ability to meet and achieve the benefits of its cost-reduction goals and otherwise successfully adapt its cost structures to continuing changes in business conditions; ongoing competitive, pricing and gross margin pressures; the risk that our cost-cutting initiatives will impair our ability to develop products and remain competitive and to operate effectively; the impact of geopolitical uncertainties on our operations, our markets and our ability to conduct business, the ability to improve asset performance to adapt to changes in demand; the ability to successfully introduce new products at the right time, price and mix, and other risks detailed in Agilent’s filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2006. Forward-looking statements are based on the beliefs and assumptions of Agilent’s management and on currently available information. Agilent undertakes no responsibility to publicly update or revise any forward-looking statement.

(1) Adjusted net income from continuing operations, adjusted net income from continuing operations per share, and adjusted net income are non-GAAP measures. Each of these measures is defined to exclude primarily the impacts of restructuring and asset impairment charges, business separation costs, non-cash stock-based compensation, intangible amortization as well as gains and losses from the sale of investments and disposals of businesses net of their tax effects. Adjusted net income from continuing operations excludes the impact of discontinued operations, including Verigy, and adjusted net income includes the impact of Verigy. A reconciliation between adjusted net income from continuing operations, adjusted net income, and GAAP net income from continuing operations is set forth on page 5 of the attached tables along with additional information regarding the use of this non-GAAP measure.

(2) Return On Invested Capital is a non-GAAP measure and is defined as income (loss) from operations less other (income) expense and taxes, annualized, divided by the average of the two most recent quarter-end balances of assets less net current liabilities. The reconciliation of ROIC can be found on page 6 of the attached tables, along with additional information regarding the use of this non-GAAP measure.

(3) Adjusted net income per share as projected for Q107 is a non-GAAP measure which excludes primarily the impacts of future restructuring and asset impairment charges, non-cash stock-based compensation, and intangibles amortization. Most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP amounts has been provided. Future amortization of intangibles is expected to be approximately $10 million per quarter.

(4) Historical segment data have been restated to correspond to current presentation.

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Download Financial Statements for Fourth Quarter Fiscal 2006: Financial Tables (337KB):


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